How to Become a Successful Real Estate Investor: 8 Lessons From the Pros

As an investor, you know that knowledge is everything. The information you collect, the data you consider, and the wisdom you apply are all factors that help you identify profitable investments and keep them earning cash.

Many investors learn from their failures. They fret over a bad tenant, stress about their account balance, and sometimes lose money. They walk away from those events with more wisdom, but the lessons were quite painful.

But just because they failed doesn't mean you have to. You can learn from their mistakes and apply their hard-earned knowledge to your investments.

That's why we reached out to several professional real estate investors. We wanted to uncover their most valuable nuggets of wisdom and pass them on to you. Use their knowledge to protect yourself and create positive investments.

Here's the simple question we asked:

"What is the most important lesson you would pass on to other real estate investors?"

1. Focus on Sustainability

In my 35+ years of investing, I can, without question, say you will learn a lot of dos and don’ts.

There is one lesson that I learned however organically over time: Invest for sustainability.

This was something no one was teaching. This goes beyond learning how to evaluate property and evaluate pro-forma reports. You can buy cash flowing investment property in any city in the U.S.A. but focusing on an investment property that will give consistent returns year after year while having the best chance of sustained upward appreciation is where the sustainable ROI is at.

Spend more time looking at the big picture, like the job growth and job diversity in the area you wish to invest. Look at the affordability index of the market and invest in undervalued markets. Watch for things like the population growth and the economic strength of the market before worrying about a solid structure and good cash flow.

If a great building and great cash flow are not sustainable you may still have a poor investment. Invest like the seasoned inventors and watch your ROI grow into sustainable returns.

2. Be Willing to Learn and Change

1. Join the club: Literally and figuratively. Join a local real estate investment club to network with others. Also understand that there are (and have been) a lot of other normal people traveling the same investing journey you are going down. These investors will deal with a lot of the same BS you are about to deal with.

Become a real estate investing education sponge, learn what must be done daily, and do it promptly and proactively.

2. Have mentors: Paid or unpaid, having someone you can call in real-time to get some questions answered can be priceless. This person obviously should have significantly more experience than you do.

3. Lean into discomfort: After closing my 30th deal, I remember looking into the mirror and saying to myself "I should've accomplish this goal a lot sooner." When you're starting out you will learn a lot of new things, skills, and even having to reprogram some bad habits. You will absolutely not be the same person you are today as you will be in six months if you are actively investing and working with society. Become a real estate investing education sponge, learn what must be done daily, and do it promptly and proactively.

3. Educate Yourself

Knowledge is the new currency. Without it you are doomed to follow other people’s advice without knowing if it’s good or bad. Knowledge will also help take you from being a “good” investor to becoming a great investor, and that knowledge will help provide a passive stream of income for you or your family.

4. Gain Clarity and Don't Neglect Marketing

The most important lessons I would pass on to other investors are these two things. One is to get clear on what business you are in, and secondly, understand that marketing is your #1 job in this business.

When you ask real estate investors what business they are in, they will usually tell you they are in the “house business.” Actually, we are in the problem solving business that just happens to involve houses. You will have much more success in this business if you approach it from this perspective.

Marketing is the most important thing for you to focus on whether you’re just starting out or you’re a seasoned investor.

How can you help the seller solve their problem with the property?

When it comes to marketing, if you don’t get really good at this you won’t have any leads coming in the door. Marketing is the most important thing for you to focus on whether you’re just starting out or you’re a seasoned investor. You need 3 to 5 lead channels (marketing strategies) working at all times for a steady stream of leads. Create a marketing plan, and work your plan.

5. Work Hard; Stay Disciplined

First, work to earn investment capital, then live on your investments. Be clear about the difference and stay disciplined.

Second, potential isn’t ability and ability isn’t achievement. In life, you’re rewarded for achieving things. Work hard to turn your potential into ability. Then work hard to turn your ability into achievement. Only then can you claim victory.

Third, the essence of investing is acquiring the efforts of others. The tenant is the asset, not the property. The property doesn’t produce anything. The rental income is derived from the work product of the tenant at his job or business. The property is just a mechanism to acquire a portion of the tenant’s productivity.

6. Invest Across Borders

Live where you want to live, but invest where the numbers make sense. You’re not restricted to only those opportunities in your local area. It’s okay to cross county, state and international borders to find great opportunities.

The key is to develop a strong relationship with a great local team and let them help you find, finance and manage the property. And when they do, take good care of them because they’re taking good care of you.

7. Look Past the Window Dressings

The most important lesson I learned about real estate investing came to me unexpectedly from a senior real estate investor I befriended early in my career back in 1976. It was not intended to teach me anything, just a simple response to a comment I made. Yet it shaped my perception of real estate investing from that day forward, and here I am passing it on so many years later.

We were driving by a large shopping center that had just come up for sale in Mission Viejo, California. It was a mission-style motif with palm trees and flower beds galore. To me, the property was beautiful and I said so. My friend’s response was, "Only women are beautiful, Jim, what are the numbers?"

The fact is that real estate investing is a business. So unlike residential properties where buyers would naturally be swayed by curb appeal and design, rental income property is foremost about the numbers.

As a real estate investor, therefore, learn to look past the property’s window dressing and concentrate on its cash flow, rates of return and profitability.

8. Find Your Own Strategy

I’d say the most important lesson that I’ve seen make a difference for investors is following the strategies that actually resonate with them. By that I mean—don’t go flip a house just because it sounds like it will be profitable and it’s what investors are supposed to be doing.

First, realize that there are numerous ways to be involved in real estate investing and they all accomplish different goals and require different skill sets and involvement levels (and risk levels!). You’ve got to find the strategy that is best fit to you personally in each of those areas.

When you find the strategy that best fits you, you will succeed with it. So when someone tries to tell you what you “should” be doing, take it with a grain of salt because what works for one person may not work for another. Don’t swim upstream!

Find what comes most naturally to you, and follow that path. Only then will you truly succeed.

Going Forward

If any of that advice sounds familiar - good for you! Consider it validation for what you already know. If any of it was new, apply it moving forward and use their advice to skip the painful lessons.